Bananas Lend Stability in Post-Conflict Colombia

For more than a generation, banana farmers and workers in the regions of Urabá and Magdalena, Colombia, have been seeking one thing: stability. Following the 2006 peace process that brought an end to major conflicts in Colombia, the focus shifted to resurrecting the battered economy.

During the conflict, the once-thriving banana sector of Urabá and Magdalena suffered heavily and local economies ground to a halt. Many farmers abandoned their farms or could not visit them. At the end of any conflict, providing options for displaced farmers and veterans was of vital importance for maintaining the peace.

The improved security situation set the stage for a revival of the banana sector and a major increase in the number of Fairtrade producer organizations. In 2007, there were just four Fairtrade producer organizations, a number that grew to 36 as of 2013. The country exported 6.2 million boxes of Fairtrade bananas in 2012, mostly to the UK and the Netherlands, representing 35 percent of global Fairtrade banana sales.

Much of this growth is due major commitments in 2010 from Dutch retailers to stock 100 percent Fairtrade bananas, and commitments from UK retailers. This led to the development of an innovative public-private partnership involving the Colombian Banana Growers Association (AUGURA), the Banana Growers Union of Urabá , Fyffes, Max Havelaar/Fairtrade, and the Dutch Ministry of Foreign Affairs (read the original story here).

The CODER study confirmed that Fairtrade has had a positive impact for small-scale farmers and workers in the last three years thanks to implementation of Fairtrade Standards and strong sales on Fairtrade terms, alongside the establishment of a strong labour union, and the support of the public-private partnership.

For small-scale farmers it was found that:

The Fairtrade Minimum Price increased household income and stability for farmers enabling housing improvements and improved access to health services and education.

The Fairtrade Premium was instrumental in lowering production costs and increasing productivity. Producer organizations elected to spend 35 percent of their Premium on these kinds of improvements.

Farmers have managed to sell an average of 80 percent of their bananas on Fairtrade terms, resulting in increased membership, improved services and a stronger business position.

For workers on plantations, it was found that:

Workers encountered greater stability as a result of the Hired Labour Standard’s requirement of formal contracts, which resulted in additional rights and protections linked to contracts.

Responsible use of the Fairtrade Premium allowed the workers to set up a loan fund with better terms than could be found elsewhere.

Workers considered home improvement important and during the last years, 60 percent of Premium funds have been invested in housing. Investments in housing increased the demand for other services and goods stimulating local economies.

However for all of the positive outcomes, the study found that prices paid for bananas remain at an unsustainable level for many. Rampant consolidation in distribution channels and a sustained price war between retail outlets continue to put price pressure on banana producers.

In a banana price review implemented in January 2014 , Fairtrade International implemented a substantial increase to the Fairtrade Minimum Price based on system wide research. It is hoped that this will give small producer organization and plantations a stronger position for negotiations. Fairtrade continues to monitor the impacts of the pricing change.